Credit Union Strategic Planning for 2014

With adequate planning, training and coaching, credit unions can capture big opportunities for growth in 2014

Credit Union Strategic Planning 2014

Beginning in the summer and continuing into the fall, credit unions are engaged heavily in planning for next year. Near the start of the planning season this year, Credit Union Magazine published an article on some of the industry’s top trends influencing strategic planning. According to the article, credit unions are—or should be—examining trends including the following:

  • A 68% annual growth rate in mobile payments—from $16 billion in 2010 to a projected $214 billion by 2015—means credit unions must be accessible via mobile payment devices to retain the increasing number of members who use them. And with an estimated two billion active smartphones worldwide by the end of 2013, more members expect to be able to access their credit union’s products and services through their mobile devices. Credit unions that don’t meet those needs will lose members.

  • Loan underwriters and officers must prepare to take advantage of rising demand for auto loans, credit cards and purchase mortgages. Loan growth should be up 5.5 percent for 2013 and 6.5 percent for 2014. Home prices are expected to rise three to five percent over the year, driving demand for home equity loans and second mortgages.

  • The Federal Reserve’s low-interest rate policy will put downward pressure on net interest income over the next two years, driving credit unions’ need to increase the number of booked loans.

  • Credit unions should tap into the approximately 68 million adults in the U.S. who are either under-banked or unbanked, with potential revenue in the tens of billions.

  • Many in the 100 million-member Gen Y population have low awareness of credit unions. According to CUNA research in April 2012, 48 percent of non-members 18 to 24 were “not at all familiar” with credit unions, 24 percent “not very familiar,” 23 percent “somewhat familiar,” and just six percent “very familiar.”

The Good News

Woman holding a sign that reads Money Talks, I'm Putting Mine in a Credit UnionThe good news is that there’s a good story to tell Gen Y—and all other prospective members. In an interview with Owen Thomas on Bloomberg Television’s “On the Move” in July 2013, CUNA CEO Bill Cheney said credit unions are becoming more popular. They’re a better deal, he said, because of their cooperative ownership structure. When banks cut back on lending during and since the financial crisis, credit unions “really stepped forward and they were there for their members.”

“A credit union by its very nature is focused on its members, so when the members can’t get credit elsewhere they come to the credit union, and that’s their focus because they’re member-owned. They’re not stockholder-owned,” said Cheney. “They can be 100-percent focused on their depositors and their borrowers.”

“Credit unions have a very close relationship with their members,” he continued. “Because the members are the owners. Credit unions didn’t get involved in the kind of loan deals and risky business that caused some of the problems in the financial crisis. They tend to be conservative lenders but they do want to meet the needs of their members, and they stepped forward to do that during the crisis and their reaping the benefits of that now.”

Additionally, here are some other opportunities to consider in the planning process:

  • Turning member service calls into sales – The average cost of a call into a credit union’s member service center can be more than $2.50. Why not turn that expense into revenue by transitioning as many calls as possible to a sales opportunity? Top-performing member service centers train and coach their MSRs to use a Quality Conversation that starts with a friendly and effective greeting, shows a genuine interest in their members, and includes discovery questions that help them understand the members wants, interests, needs and dominant buying motives so they can add more value for each member that calls in. These discovery questions tie the members’ wants, interests, needs and dominant buying motives to the credit union’s product and service offerings and overall value—from mobile payment capabilities, loans, and credit cards to the superior experience credit unions provide, as Cheney said, “by their very nature.” Taking this approach will turn calls like balance inquiries into significant sales and revenue growth.

  • Increasing booked loans – Credit unions approved a significant number of loans over the past year that they did not book. Outbound calling campaigns can bring in millions of dollars of additional loan business that would not materialize without such campaigns. The key is to make calls that add value and don’t just pester the member to take action. This involves a Quality Conversation approach that MSRs again use to deliver an effective and friendly greeting, show a genuine interest in the members, and ask discovery questions that help them understand the members wants, interests, needs and dominant buying motives. Then, the MSRs tie the members’ wants, interests, needs and dominant buying motives to the loan to be booked.

For a great example that shows how effective the Quality Conversation is for credit unions, read this case study on a program called Member Connect that my company, Robert C. Davis and Associates, conducted at Police and Fire Federal Credit Union in Philadelphia: http://robertcdavis.net/case-study-police-fire-federal-credit-union/.

So the big opportunities are there across the board. But the importance of adequate training and coaching cannot be overstated as credit unions prepare their PFI member acquisition, sales and loan growth and retention strategies. RCDA can share our expert knowledge with your employees to turn member service calls into sales, grow loans, target other products to grow, and tell the compelling credit union story—all through our proven Quality Conversation approach. And remember, becoming the primary financial institution is the key to both short-term and long-term success and growth. Our approach is very effective at capturing the core financial relationship, too.

Contact us at 678-548-1775 or email bob@robertcdavis.net to arrange a free consultation on how RCDA can help you optimize your strategies during your critical planning season.

Learn more at www.robertcdavis.net.